- 29 May 2023
- ICICI Securities
Government asks subsidiary of Greaves Cotton to return - 124 crore plus interest over FAME II violations
GREAVESCOT - 135 Change: -0.90 (-0.66 %)News: The Ministry of Heavy Industries said it has proposed to deregister the company from FAME II as it failed to adhere to PMP guidelines. Also, the Ministry of Heavy Industries (MHI) has directed GEMPL to deposit all the incentives claimed (~|124 crore along with interest) under the said scheme to the MHI subject to submission of necessary representation. The Faster Adoption and Manufacturing of Electric and Hybrid Vehicles (FAME) India scheme commenced on April 1, 2019, for a period of three years, and was further extended for a period of two years up to March 31, 2024. Greaves Electric Mobility is a subsidiary of Greaves Cotton Ltd. It has electric two-wheeler models Primus, Magnus EX, and Reo Plus under the Ampere brand umbrella.
Views: This will negatively impact Greaves Cotton. In FY23, Greaves Cotton’s E-Mobility segment reported revenues of | 1124.3 crore, which grew by 115.3% on a YoY basis. And EBIT of | 78 lakh vs. EBIT loss of | 34.45 crore. Also the company yet to receive ~|350 crores from the FAME II subsidy. The government provides an incentive of ~15,000 per kWh on electric two-wheeler capped at 40% of the total vehicle cost, provided they meet specified localisation criteria. The subsidy for EV makers ranges between ~17,000 and ~66,000 per electric two wheelers. However, from June 1, 2023, the Centre has slashed the subsidy for electric two-wheelers to ~10,000 per Kwh. The existing maximum subsidy cap has also been brought down to 15%.
Impact: Negative